Their routers were their hottest-selling product, and those routers ran Linux.
As far as VXWorks, you appear to be implying something that isn't true -- that Cisco decided it didn't like Linux, especially because of the settlement. The FACT is that VXWorks is an RTOS that can requires half the RAM and half the flash of Linux, saving Cisco manufacturing costs for the WRT54G.
To confirm that it is not a philosophical issue, after the switch Cisco released the WRT54GL with Linux and the previous amount of memory.
He claimed Linksys wouldn’t exist without Linux, which is total bunk of course, most of their products never used Linix and the 54G that did had it ripped off. Whine all you want his claim is total BS and typical linux fanboism at the extreme.